Growth of businesses.

Why might a business want to grow?

• Their existing products may be in the later stages of their life cycles.
• The business may lack sufficient knowledge or resources to develop organically.
• The speed of growth is a high priority for the company.

How might a business grow?

• Mergers
  
• Take-overs
• Developing & launching new products
• Marketing

Limitations of take-overs.

• Issues of changes in management.
• Resistance from employees.
• High costs.
• Conflicting management styles, structures or cultures.
• Unhappy customers or suppliers.

Joint venture: A separate business identity created by two or more companies, it involves shared ownership, risks, and returns. In some cases, businesses may join together short-term for a project.

Lateral merger: The purchase of a firm who is in a related field. I.e. Confectionary company may purchase a chewing gum company (Mars merged with Wrigley).

Conglomerate merger: The merger of two firms who have no common interest.

Demerger: Happens where one firm separates into two or more companies or sells a part of their business. I.e Fosters, Talk-Talk, Cadbury. 

Partial demerger: The parent company still holds a stake in the demerged business.

Reasons for a demerger:

• To focus on core business to ease costs and improve profit margins. 
• To reduce the risk of diseconomies of scale (Business grows too much to withstand the increase of costs per unit)
• To raise money from sales of other holdings to give back to shareholders.
  
• To have a strategy to defend the company from competition authorities who…